Current system viewed as fragmented and unstructured.
School districts and municipalities can still set their own EIT withholding rate – most common is 1%
DCED (not new) is responsible for economic growth, business assistance, budgeting, spending, etc.TCD are almost completely aligned with county lines, but Allegheny county is split 4 ways and Philly is excluded altogetheras they were excluded from the original 511 as wellPSDs are what we formerly called municipalities, locales, school districts, etc i.e. Upper St. Clair, etc.
Difference between type of clients? Data entry vswebpay etc…
Sentric Presents ACT 32 - November 2011
Pennsylvania Local Tax Reform -- Act 32 Your Workforce. In Focus.
What - When - Why?On July 2, 2008 the Pennsylvania legislatureenacted an amendment of the Local Tax EnablingAct, Act 511 of 1965Mandatory compliance is effective January 1, 2012.With the goal of consolidating and simplifying thecollection of Local Earned Income taxes on acountywide basis. Your Workforce. In Focus.
Current Local Tax Collection System Fragmented - Unstructured 560 collectors collecting for 2,500+ localities Related municipalities and school districts remitting to separate collectors Manual payment processing Quarterly/Annual Returns not standard and filed manually Only addresses the work site tax Your Workforce. In Focus.
Streamlined Improvements with Act 32 Standardization of forms and definitions Consolidation of the Tax Collectors 560 reduced to about 66 Districts can still set their EIT rates Your Workforce. In Focus.
PA Act 32 - New Terms • Pennsylvania’s Department of Community and Economic Development – the overseeing body of Act 32DCED • Tax Collection District – contains municipalities and school districts within a defined areaTCD • Political Subdivision – the municipalities and school districtsPSD Your Workforce. In Focus.
PA Act 32 ImprovementsSTREAMLINED: 21 Collectors with only 69 Tax CollectionDistricts (TCDs)STANDARDIZED: Political Subdivision (PSD) Codes-6 digits » First 2 digits represent the TCD » Second 2 digits represent the School District » Third/final 2 digits represent the MunicipalitySTREAMLINED: Municipalities School Districts will share TCDEFFICIENCY: Payment processing will be electronic for fasterand more accurate processingQuarterlies and W2s filed electronically Your Workforce. In Focus.
PA Act 32 – Employer Requirements Registration Register with TCD where business is located Paper vs. Online registration Multiple worksite employers • Can consolidate PA sites to remit/file to one TCD. • Must file monthly and electronically • Must send notification to all other affected TCD’s alerting to which TCD you are remitting/filing. Your Workforce. In Focus.
PA Act 32 -Employer Requirements Employee Information Employees must complete Local Residency Form Survey all active employees Provide form to every new hire and employees who change address Employer must keep original on file, do not send to collector Withholding for all employees is MANDATORY Your Workforce. In Focus.
PA Act 32 – Employer Requirements Employee Information State provided spreadsheet to assist employers to help employees to determine PSD codes If an employee cannot determine their PSD code, recommendation is to use the work location non- resident PSD code to withhold the minimum 1% Your Workforce. In Focus.
Employer Requirements Summary Step 1: Step 2: Gather Step 3: EE Employer Employee WithholdingRegistration InformationDetermine where Be proactive and business is Distribute set up employeeslocated or where Residency Forms now with currentyou are going to to all employees tax codes reportRegister with the Sentric will convert Assist inTCD where your old codes to PSD determining PSD business is codes effective codes located 1/1/2012 Your Workforce. In Focus.
Act 32 Payment Cycle Tax Withheld from Employees Employee Money isfiles annual remitted to return with work location Resident TCD TCD TCD collector Work location forwards TCD collector money to sends to municipality Resident PSD TCD Your Workforce. In Focus.
PA Act 32 - Compliance with Sentric All PSD codes are currently available in our system Developed a program that converts old PA-xxxx codes to PSD codes on all employees effective 01/01/2012. System logic will compare work location PSD to resident location PSD to withhold higher rate as required by Act 32 Your Workforce. In Focus.
Sentric’s PA Act 32 ServicesTaxCheck/TaxNotice ServicesAutoTax ServicesQuarterly and W-2 Processing Your Workforce. In Focus.
PA Act 32 - FAQsIs the LST (Local Who will send theServices Tax) included in residency certificationAct 32? form to my employees?No. The Local Services Tax The employer is responsiblefalls under its own Act. for surveying, collecting and keeping the employees’ PSD certification information. Your Workforce. In Focus.
PA Act 32 - FAQsWhen are we required Am I required to notifyto implement Act 32? my employees of the Act 32 requirements?Act 32 is effective1/1/2012. No, notification to employees is not required. Your Workforce. In Focus.
PA Act 32 - FAQsWhat if an employer has out-of-state employeesworking in PA?The employer must withhold at the work location’sestablished non-resident rate Your Workforce. In Focus.
PA Act 32 - FAQsWhat if I refuse to comply with Act 32’s mandatedrequirements?Employers can be fined up to $25,000and can be sentenced to up to 2 yearsin jail. Your Workforce. In Focus.
Reference Documents & Links PSD Codes Interactive TCD Map TCD and Collector Listing Residency Certification Form Municipal Statistics Tax Report – Address Lookup American FactFinder – US Census Bureau DCED Act 32 Information DCED LST Related Information Your Workforce. In Focus.
Questions ?Disclaimer: These slides are for educational purposes only. They are not intended to be accounting advice. Your Workforce. In Focus.